I have a property…market value $1.3M and loan is $420k. I was hoping to increase the loan to $700k and use the additional funds for a range of investment opportunities but the bank will only approve $100k. Income is not the issue, apparently cashout restrictions!!! What does this mean and will I come across the same problem if I go to refinance?

Hi Andrew

Yes many lenders have this restriction in place. However can be overcome if you can clearly demonstrate what the funds are being used for.

And not all lenders impose these restrictions. I do this regularly for business owners who are using equity as a smart way to restructure business funding. The same is applied to other forms of investment.

Happy to discuss with you in more detail.

Cheers

Casey

HI Andrew,

Different lenders have different policies around "cash out". There are a number of lenders that are more flexible with both the amount and purpose for the cash out.

This is general advice, I would recommend getting in touch with a mortgage broker in your area. A good mortgage broker should take the time to understand your situation in detail before comparing a number of lenders to find the best solution for you.

Cheers,
Frank

Hi Andrew,

As with previous answers it sounds like you need to engage the services of a mortgage broker to find the right lender to meet your criteria.

Each lender will have a policy on cash out restrictions in regards to amount and purpose of the funds, along with finding one that will give you the amount you desire you will also want to consider the evidence they require for the purpose of the funds (think financial planner advice for investment purposes).

You should also consider a lender that will allow you to structure the loan in the most effective way. A lot of my customers in this situation will want to split the loan so they can keep track of the interest expense on the investment portions for tax purposes and some may even want to have that portion interest only depending on taxation advice th y have received from their accountant.

A great broker will take all of this into consideration along with the interest rate when finding the correct lender and loan product for you.

If you are looking for someone like that please feel free to get in touch

Nathan Osinski
Osinski Finance

Hi Andrew,

Change banks!

As all of the others have mentioned it varies according to each lenders policies but you can access 85% of the bank valuation with some lenders. Understand of course that the bank valuation may be well under what the market value appears to be.
You would need a valuation of $875,000 to borrow $700,000 at 80% and not pay LMI so provided that you can demonstrate servicing at the assessment rate of 7.25% you should have no problem. This loan would attract 3.79% principal and interest.
Feel free to get in touch if you would like my help
Regards
Scott